TMI Tax Updates - e-Newsletter
February 3, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Central Excise

TMI Short Notes

• Bill:

  Amendment in the provisions of Act relating to verification of the return of income and appearance of authorized representative.

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• Bill:

  Rationalisation of the provisions of section 49 and clause (42A) of section 2 of the Act in respect of segregated portfolios.

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• Bill:

  Rationalisation of provision relating to Form 26AS

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• Bill:

  Rationalisation of provisions relating to tax audit in certain cases.

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• Bill:

  Expanding the eligibility criteria for appointment of member of Adjudicating Authority under the Prohibition of Benami Property Transaction Act, 1988.

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• Bill:

  Filing of statement of donation by donee to cross-check claim of donation by donor

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• Bill:

  Rationalising the process of registration of trusts, institutions, funds, university, hospital etc and approval in the case of association, university, college, institution or company etc

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• Bill:

  Amendment of sub-section (7) of section 11 to allow entities holding registration under section 12A/12AA to apply for notification under clause (46) of section 10

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• Bill:

  Rationalization of provisions of section 55 of the Act to compute cost of acquisition.

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• Bill:

  Removing dividend distribution tax (DDT) and moving to classical system of taxing dividend in the hands of shareholders/unit holders.

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• Bill:

  Deferring Significant Economic Presence (SEP) proposal, Extending source rule, Aligning exemption from taxability of Foreign Portfolio Investors (FPIs), on account of indirect transfer of assets, with amended scheme of SEBI, and rationalising the definition of royalty.

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• Bill:

  Aligning purpose of entering into Double Taxation Avoidance Agreements (DTAA) with Multilateral Instrument (MLI).

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• Bill:

  Penalty for fake invoice.

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• Bill:

  Amending definition of “work” in section 194C of the Act.

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• Bill:

  Modification of residency provisions.

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• Bill:

  Insertion of Taxpayer’s Charter in the Act.

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• Bill:

  Provision for e-penalty.

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• Bill:

  Clarity on stay by the Income Tax Appellate Tribunal (ITAT).

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• Bill:

  Providing check on survey operations under section 133A of the Act.

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• Bill:

  Provision for e-appeal.

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• Bill:

  Amendment in Dispute Resolution Panel (DRP).

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• Bill:

  Modification of e-assessment scheme.

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• Bill:

  Widening the scope of Commodity Transaction Tax (CTT).

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• Bill:

  Rationalization of tax treatment of employer’s contribution to recognized provident funds, superannuation funds and national pension scheme.

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• Bill:

  Widening the scope of section 206C to include TCS on foreign remittance through Liberalised Remittance Scheme (LRS) and on selling of overseas tour package as well as TCS on sale of goods over a limit.

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• Bill:

  Widening the scope of TDS on E-commerce transactions through insertion of a new section.

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• Bill:

  Enlarging the scope for tax deduction on interest income under section 194A of the Act.

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• Bill:

  Reducing the rate of TDS on fees for technical services (other than professional services).

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• Bill:

  Allowing deduction for amount disallowed under section 43B, to insurance companies on payment basis.

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• Bill:

  Amendment for providing attribution of profit to Permanent Establishment in Safe Harbour Rules under section 92CB and in Advance Pricing Agreement under section 92CC

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• Bill:

  Modification of the definition of “business trust”

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• Bill:

  Allowing carry forward of losses or depreciation in certain amalgamations.

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• Bill:

  Deferring TDS or tax payment in respect of income pertaining to Employee Stock Option Plan (ESOP) of start- ups.

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• Bill:

  Exempting non-resident from filing of Income-tax return in certain conditions.

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• Bill:

  Providing an option to the assessee for not availing deduction under section 35AD.

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• Bill:

  Increase in safe harbour limit of 5 per cent. under section 43CA, 50C and 56 of the Act to 10 per cent..

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• Bill:

  Excluding interest paid or payable to Permanent Establishment of a non-resident Bank for the purpose of disallowance of interest under section 94B.

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• Bill:

  Amendment of section 194LD of the Act to extend the period of concessional rate of withholding tax and also to extend this concessional rate to municipal debt securities.

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• Bill:

  Amendment of section 194LC of the Act to extend the period of concessional rate of withholding tax and also to provide for the concessional rate to bonds listed in stock exchanges in IFSC.

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• Bill:

  Amendment of section 115BAB of the Act to include generation of electricity as manufacturing.

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• Bill:

  Modification in conditions for offshore funds’ exemption from “business connection”.

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• Bill:

  Extending time limit for sanctioning of loan for affordable housing for availing deduction under section 80EEA of the Act

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• Bill:

  Extending time limit for approval of affordable housing project for availing deduction under section 80-IBA of the Act.

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• Bill:

  Rationalization of provisions of start-ups.

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• Bill:

  Exemption in respect of certain income of Indian Strategic Petroleum Reserves Limited.

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• Bill:

  Exemption in respect of certain income of wholly owned subsidiary of Abu Dhabi Investment Authority and Sovereign Wealth Fund.

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• Bill:

  Withdrawal of exemption on certain perquisites or allowances provided to Union Pubic Services Commission (UPSC) Chairman and members and Chief Election Commissioner and Election Commissioners

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• Bill:

  Modification of concessional tax schemes for domestic companies under section 115BAA and 115BAB

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• Bill:

  Incentives to Individual and HUF.

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• Bill:

  Incentives to resident co-operative societies.

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• Bill:

  Rates for deduction of income-tax at source from “Salaries”, computation of “advance tax” and charging of income-tax in special cases during the FY 2020-21.

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• Bill:

  Rates for deduction of income-tax at source during the financial year (FY) 2020-21 from certain incomes other than “Salaries”.

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• Bill:

  Rates of income-tax in respect of income liable to tax for the assessment year 2020-21.

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Articles

• Important changes in GST Laws
• Filing of statement of donation by donee to cross-check claim of donation by donor
• Key highlighted Income Tax –Budget 2020
• Government Has No Business Being in Business - Economic Survey reiterates Modi's Minimum Government and Maximum Governance pledge

News

• ₹ 1,10,828 crore GST Gross Revenue collected for January, 2020

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• Budget 2020-21 + FINANCE Act, 2020

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• Budget Speech 2020-2021

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• Summary of Union Budget 2020-21

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• KEY HIGHLIGHTS OF UNION BUDGET 2020-21

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• ‘Ease of Living’ - central Tenet of Union Budget 2020-21

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• A Corruption-Free, Policy Driven good Governance and a Clean & Sound Financial Sector to Ensure Ease of Living to All Citizens

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• Macro-economic Framework Statement (MFS) 2020-21 predicts rebound in GDP growth from first quarter of 2020-21

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• New Personal Income Tax Regime heralds significant relief, especially for Middle Class Taxpayers

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• MSMEs turnover threshold for Audit increased 5 times to ₹ 5 Crore

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• Finance Minister proposes wide-ranging facilitation measures in Direct Tax Regime

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• DDT proposed to be removed; to lead to estimated annual revenue forgone of ₹ 25,000 crore

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• Increase in Customs Duty on Footwear and Furniture to promote domestic MSMEs

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• 16 Action points to Focus on Farmer’s Income, Storage, Blue Economy and Animal Husbandary

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• Union Budget 2020-21 allocates ₹ 99,300 crore for Education, ₹ 3,000 crore for Skill Development

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• ₹ 69,000 crore provided for Health Care in Union Budget 2020-21

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• ₹ 35,600 Crore outlay for nutrition-related Programmes for 2020-21

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• 148 Km long Bengaluru Suburban Transport Project at a cost of ₹ 18600 Crore proposed

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• Reforms in Banking Sector to remain priority

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• 100 more Airports to be developed by 2024 to support UDAAN Scheme

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• Tourism sector proposed to get ₹ 2,500 Crore in union budget 2020-21

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• Entrepreneurship has always been the strength of India: Smt. Nirmala Sitharaman

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• Data Centre Parks Policy soon for Private Firms to Leverage the Power of Data

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• Coalition for Disaster Resilient Infrastructure will enhance Climate change adaptation with a focus on Disaster Resilient Infrastructure: Finance Minister

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• Government committed to ODF plus to sustain ODF behaviour

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• Customs Notification

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• Sovereign Gold Bond Scheme 2019-20 (Series IX) – Issue Price

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• Monthly Review of Accounts of Union Government of India up to the month of December 2019 for the Financial Year 2019-20.

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Notifications

Customs

• 03/2020 - dated 2-2-2020 - ADD
  Rescinds the notifications of No. 28/2016-Customs(ADD), dated the 5th July, 2016, Notification No. 28/2019-Customs(ADD), dated the 24th July, 2019.

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• 12/2020 - dated 2-2-2020 - Cus
  Rescinds the Various notifications.

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• 11/2020 - dated 2-2-2020 - Cus
  Amendments in the Notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 82/2017-Customs, dated the 27th of October, 2017.

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• 10/2020 - dated 2-2-2020 - Cus
  Amendments in the Notification Nos. 73/2005-Customs, dated the 22nd July, 2005.,Notification No. 101/2007-Customs, dated the 11th September, 2007, Notification No.46/2011-Customs, dated the 1st June, 2011, Notification No.53/2011-Customs, dated the 1st July, 2011.

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• 09/2020 - dated 2-2-2020 - Cus
  Amendments in the Notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 11/2018-Customs, dated the 2nd February, 2018.

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• 08/2020 - dated 2-2-2020 - Cus
  Respective exemption notifications for medical, surgical, dental or veterinary uses. - Exemption from the whole of the Health Cess.

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• 07/2020 - dated 2-2-2020 - Cus
  Amendments in the Notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 25/2005-Customs, dated the 1st March, 2005.

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• 06/2020 - dated 2-2-2020 - Cus
  Amendments in the Notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 24/2005-Customs, dated the 1st March, 2005.

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• 05/2020 - dated 2-2-2020 - Cus
  Amendments in the notification of the Government of India, in the Ministry of Finance, (Department of Revenue) No. 25/99-Customs, dated the 28th February, 1999.

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• 04/2020 - dated 2-2-2020 - Cus
  Amendments in the Notification of the Government of India in the Ministry of Finance (Department of Revenue), No.148/1994-Customs, dated the 13th July, 1994.

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• 03/2020 - dated 2-2-2020 - Cus
  Amendments in the Notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 19/2019- Customs, dated the 6th July, 2019.

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• 02/2020 - dated 2-2-2020 - Cus
  Amendments in the Notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 57/2017- Customs, dated the 30th June, 2017.

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• 01/2020 - dated 2-2-2020 - Cus
  Amendments in the Notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 50/2017- Customs, dated the 30th June, 2017.

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• 10/2020 - dated 2-2-2020 - Cus (NT)
  Customs Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidised Articles and for Determination of Injury) Amendment Rules, 2020.

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• 09/2020 - dated 2-2-2020 - Cus (NT)
  Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Amendment Rules, 2020.

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• 08/2020 - dated 31-1-2020 - Cus (NT)
  Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver

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• 01/2020 - dated 2-2-2020 - Safeguard
  Amendments in the Notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 01/2018- Customs (SG), dated the 30th July, 2018.

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DGFT

• 45/2015-2020 - dated 31-1-2020 - FTP
  Incorporating Policy Condition under HSN Code 4810 of Chapter 48 of Schedule Policy I (Import Policy), ITC(HS), 2017

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Circulars / Instructions / Orders

Customs

• D.O.F. No. 334/2/2020-TRU - dated 1-2-2020
  D.O. Letter from JS(TRU-I)

Highlights / Catch Notes

GST

• ₹ 1,10,828 crore GST Gross Revenue collected for January, 2020
  Visit to Get Source

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• Classification of goods - Rice Husk Board - the product is a Fibreboard and is more aptly classifiable under CTH 441193 as ‘Others’ as it is not a Medium Density Fibreboard. Further classification will depend on the individual properties of the product. - Taxable @12% of GST
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Income Tax

• Proceedings initiated u/s.201(1) & 201(1A) - Period of limitation - retrospective effect of amendments - period extended from 2 years to 6 years - The provisions of Sec.201(3)(ii) of the Act will come into play only when return of TDS is not filed and where return of TDS is filed, the period of limitation is governed by the provisions of Sec.201(3)(i) of the Act which is 2 years from the end of the Financial year in which the return of TDS is filed.
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• Eligibility of exemption u/s 11 - education - safety training programme - multifaceted activities in the form of handbook/literature published together with stated activities like holding conferences on industrial safety programmes, public talks, seminars, workshops etc. on ongoing basis to inculcate safety measures would also be bracketed in the league of ‘educational activities’
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• TCS u/s 206C(A)/206C(7) - non collection of TCS on sale of DOC, Maize husk and cotton waste - the CIT(A) was justified in holding that such raw cotton does not arise from manufacturing or mechanical working as it is merely a segregation of raw material as was pointed out by the assessee.
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• Assessment of capital gains in the hands of assessee HUF - claim of the assessee is that the capital gains has arisen in the individual capacity of the assessee - since assessee failed to discharge the onus, addition confirmed.
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• Exemption u/s 11 - even in case there is violation of Sec 13, the entire income of the trust is not liable to be taxed at maximum marginal rate (MMR) but only the relevant part of the income which violates sec 13 attracts the MMR.
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• Disallowance of expenses - failure to disclose the income - It is true that assessee has not shown the business receipts and income under the head business income but this reason alone cannot preclude to assessee for claiming incidental expenses incurred for carrying out business.
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• Reference of the matter to the DVO for valuation - difference in value adopted for stamp violation and actual amount received for sale of the immovable property - there is no need to refer the matter to the DVO for valuation, as there is no material in the hands of the AO to consider the additional consideration passed between the parties, as such the addition cannot be made in this case.
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Customs

• Relinquishment of title to the goods lying uncleared - Relinquishment of title to the goods is not permissible to goods that have already been cleared. Consequently, the claim for refund of section 26A is limited only to such as those which were uncleared and acknowledged as relinquished - There is no flaw in non-consideration of the claim in relation to the goods cleared by appellant
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• Import of low Aromatic White Spirit - The Foreign Trade Policy has not provided for restriction by any other importers than State Trading Enterprises to import the same. As per the policy, after getting an authorization from DGFT persons other than State Trade Enterprises can import the impugned goods. - Order for re-export set aside.
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• Interest on account of delayed sanctioned of refund - The amount of deposit during investigation has been taken illegally and retained by the Department due to callous attitude of the departmental officer including that of Commissioner (Appeals), who has acted contrary to provisions of Customs Act and also against the directions given by the Central Board of Customs and Excise.
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• Release of seized consignments for purposes of re-export - the demurrages are bound to be paid by the petitioner in accordance with law.
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• Return of bond and bank guarantee given for the purpose of provisional release at the time of clearance of goods - In view of the statements made by learned counsel for the Revenue with respect to the Provisional Duty Bond and the Bank Guarantee, the grievances ventilated in this writ petition have been brought to an end by the Revenue.
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Indian Laws

• Summary of Union Budget 2020-21
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• New Personal Income Tax Regime heralds significant relief, especially for Middle Class Taxpayers
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• DDT proposed to be removed; to lead to estimated annual revenue forgone of ₹ 25,000 crore
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Central Excise

• Clandestine removal - on the basis of third party records - As Revenue has failed to produce any supporting evidence in their favour, therefore, the charge of clandestine removal is not sustainable
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• Closure of proceedings on the ground that appellant has waived their right to a written show cause notice - appellant deposited the demand with interest and penalty under protest to buy peace - in view of the non acceptance of the allegation of the DGCEI by the appellant, as to non receipt of the inputs in question, we hold that the purported waiver is bad and illegal and is not enforceable against the appellant.
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Case Laws:

• GST

• 2020 (2) TMI 32
  Classification of goods - Rice Husk Board - whether classified as wood and Articles of Wood under Chapter 44 and attract 12% rate of GST? - HELD THAT:- Fibreboard manufactured by bonding fibres extracted from wood chips or other lingo-cellulose material. They are bonded together by adding thermosetting resins and find application such as furniture, interior decoration and in building are classified under this heading. The product in hand is a Natural Fibre Composite Board with density of ranging from 0.65 - 0.8g/Cm3(as given in the brochure) and finds application in furniture, interior decoration, building, etc. In this case as per the manufacturing process, fibres are extracted from the rice husk and then mixed with lime powder (calcium carbonate), processing additives such as lubricants, foaming agents, foam regulators, heat stabilizers, etc. PVC resin is used as a binding agent. Hence, the product is a Fibreboard and is more aptly classifiable under CTH 441193 as Others as it is not a Medium Density Fibreboard. Further classification will depend on the individual properties of the product. NFC Board manufactured by the applicant with main content as Rice husk, will more appropriately be classified under CTH 441193, the applicable rate of GST is taken up for consideration. The rate of CGST is notified vide Notification No. 01/2017-C.T.(Rate) dated 28.06.2017 as amended in respect of goods and that of SGST is notified vide Notification No. vide G.O. (Ms) No. 62 dated 29.06.2017 as amended. As per Sl.No 92 of Schedule-II of the Notifications, specifies the following goods falling under Chapter 44 or any other Chapter are subject to 6% CGST. Rice Husk Board or fibre board manufactured from agricultural crop residues, irrespective of the Chapter under which the same are classified, are subjected to CGST @ 6% and 6 % SGST.

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• Income Tax

• 2020 (2) TMI 31
  Disallowance of donation u/s 35(1)(ii) - HELD THAT:-In the facts of the present case, the CIT(Appeals) has given the finding of the fact that the amount of donation was transferred to the Herbicure through Bank channel and there is no evidence that the same is returned back in cash. It is also found that the Herbicure Foundation has confirmed that the amount has been utilized for scientific research vide confirmation dated 29.09.2016. Accordingly, the onus placed upon the assessee was discharged. In view of the aforesaid findings of the fact given by both the authorities below, no interfere in the impugned order passed by the Tribunal is required to be made. No substantial question of law arise from the order of the Tribunal. Therefore, the appeal fails and is hereby, dismissed.

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• 2020 (2) TMI 30
  Statutory remedy to prefer an appeal - Penalty u/s 271(1)(c) - HELD THAT:- Since the petitioner has preferred this petition and has been present in Court since morning, she has not been able to attend the said hearing fixed by the Income Tax Officer, Ward 30(6), New Delhi. We permit the petitioner to respond to the notice dated 23.12.2019 and appear before the Income Tax Officer, Ward 30(6), New Delhi on 05.02.2020 at 12:45 PM. No further notice would be required to be given to the petitioner for the said purpose. This date has been fixed with the consent of the Assessing Officer, who is present in Court.

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• 2020 (2) TMI 29
  TDS u/s 195 - commission to foreign entity and also paid advertisement fee and registration charges to Arab Fertilizers Association and foreign exhibition without deduction of TDS - Addition u/s 40(a)(ia)/40(a)(i) - HELD THAT:- Neither the A.O. nor the ld. CIT(A) has examined the actual nature of services rendered by the agent so as to bring them to the ambit of the fee for technical services. We further note that the assessee has made payment of commission in respect of sale to one party namely Indo-Jordan Chemical Limited, Jordan. This fact is relevant to consider the nature of services rendered by the foreign agent when the assessee has made sales only to one party. Even it is not clear from the record produced before us whether the sale made to the Indo-Jordan Chemical Limited, Jordan was an international transaction being sold to associated enterprises (AE) or not. Since the A.O. has not taken up this issue and even held that the agent has rendered the services which is in the nature of managerial acumen and expertise and consequently payment is in the nature of fee for technical services, therefore, we do not go into the said issue whether any services were rendered by the agent or not. As regards the advertisement payment, the assessee has made payment to two different media entities namely Argus Media Limited, London, U.K. and Arab Fertilizers Association, Cairo Egypt, therefore, the issue of existence of PE of the recipient can be considered only when there is a DTAA between the India and the countries of the recipient non-resident entities. The registration fee and foreign exhibition participation fee was paid to Arab Fertilizers Association, Egypt, therefore, in order to consider benefit of DTAA and existence or non-existence of PE, the provisions of the respect DTAA are required to be considered. Since neither the A.O. nor the ld. CIT(A) have examined this issue by considering the relevant facts as well as the respective DTAAs if any between the India and the country of the recipient/non-resident, therefore, in our considered opinion, this issue requires a proper verification and examination. Accordingly, we set aside this issue to the record of the ld. CIT(A) for adjudication of the same afresh - Appeal of the assessee is allowed for statistical purposes only.

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• 2020 (2) TMI 28
  Reference of the matter to the DVO for valuation - difference in value adopted for registration before the Sub-Registrar (stamp value) and the value received by the assessee for sale of the immovable property - A.O. brought the same as unexplained investment and treated as capital gain u/s 50C - HELD THAT:- The present case, the A.O. has applied the provisions of section 50C for the computation of additional capital gain on the basis of the value adopted for registration of the said property. Apart from the stamp duty valuation, there is nothing on record to suggest that the assessee has received extra sale consideration over and above the sale consideration reflected in the sale deed. It was held by the Hon ble Allahabad High Court in the case of Dinesh Kumar Mittal v. ITO [ 1991 (3) TMI 78 - ALLAHABAD HIGH COURT] that there is no law to the effect that the value determined for the purposes of stamp duty is the actual consideration passed between the parties to the sale and it is the burden of the Department to show that the assessee received extra consideration passed between the parties concerned. As in the case of Anand Banwarilal Adhukia v. Deputy Commissioner of Income-tax [ 2016 (11) TMI 294 - GUJARAT HIGH COURT] wherein held that where the Assessing Officer has no cogent material available not to satisfy himself about the requirement of section 69 of the I.T.Act, and therefore, in the absence of it the reference could not have been made u/s 142A Applying those ratio,in the present case, there is no need to refer the matter to the DVO for valuation, as there is no material in the hands of the Assessing Officer to consider the additional consideration passed between the parties, as such the addition cannot be made in this case. Appeal filed by the assessee is allowed.

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• 2020 (2) TMI 27
  Deduction u/s 80P(2)(a)(vi) - objection of the DR is that when the only work carried out by its members was overall supervision like any other prudent businessmen and the actual supervision at the field was done by the paid employees of the society and outside labourers actually carried out the work, therefore, the assessee is not entitled to the benefit of deduction - assessee submitted that the guiding factor must be that the earning of the society is through utilization of the particular kind of labour in which members specialize - HELD THAT:- Matter needs verification at the level of AO for a limited purpose as to whether the works executed by the society by the collective disposal of its own members or not after providing reasonable opportunity of being heard to the assessee. Before us the ld. AR of the assessee has acceded that if requires, the assessee is ready to produce the books of accounts before the AO for verification. If the AO finds that the works executed by the assessee society fall within the framework of the provisions of Section 809(2)(a)(vi) of the Act, then the AO shall allow deduction u/s.80P(2)(a)(vi) of the Act to the assessee society. Accordingly, we restore the matter to the file of AO for consideration of the claim of the assessee as per our above observations and the assessee shall cooperate with the AO for early disposal of the case. - Decided in favour of assessee for statistical purposes

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• 2020 (2) TMI 26
  Proceedings initiated u/s.201(1) 201(1A) - Period of limitation - retrospective effect of amendments - period extended from 2 years to 6 years - HELD THAT:- It is not correct to state that the Tribunal has given a finding in paragraph-7 of its order that the Assessee filed details of TDS statement filing dates before CIT(A). The Tribunal has only stated in paragraph-7 that it was submitted by the Assessee before CIT(A) that it had filed TDS for the relevant FYs as per details given below. The tribunal has not stated that it was filed before CIT(A). From the paper book filed in the appellate proceedings before the Tribunal, the relevant returns of TDS are available at pages-17-20 and the dates of filing TDS returns for the various quarters are correct. Even in the MP the revenue has not taken a stand that return of TDS were not filed or the dates of filing of TDS return as given by the Assessee are not correct. The revenue has gone to the extent of making allegations that the Assessee has mislead the Court with incorrect facts. The said allegation is not correct as we have already stated the dates on which returns were filed is discernible from the paper book. Next contention is that the time for passing the order was available up to 31.3.2015 as per the provisions of Sec.201(3)(ii) of the Act, and when such time limit was available the Finance Act, 2012, with retrospective amendment from 1.4.2010 extended he period of limitation to 6 years - order of the AO was passed on 11.9.2015 and therefore the order has to be regarded as one passed within the period of limitation i.e., 6 years from the end of the relevant FY i.e., on or before 31.3.2017. This contention is devoid of any merit. Firstly it is not a mistake apparent on the face of the record. Secondly, the contention is made on a total misconception. The provisions of Sec.201(3)(ii) of the Act will come into play only when return of TDS is not filed and where return of TDS is filed, the period of limitation is governed by the provisions of Sec.201(3)(i) of the Act which is 2 years from the end of the Financial year in which the return of TDS is filed. The Amendment to Sec.201(3(ii) by the Finance Act, 2012 is totally irrelevant because those provisions are not applicable in the present case at all. In fact all these aspects were elaborately discussed in paragraph-12 to 15 of the order of the Tribunal. In fact in paragraph-15 of the order the applicability of provisions of Sec.201(3)(i) of the Act to the facts of the case has been specifically discussed by holding that those provisions alone apply to the case of the Assessee because he has filed return of TDS. The MP has been filed on total misconception of facts and deserves to be dismissed and is accordingly dismissed.

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• 2020 (2) TMI 25
  Disallowance of expenses - failure to disclose the income from carrying out business of providing transport service - HELD THAT:- It is true that assessee has not shown the business receipts and income under the head business income but this reason alone cannot preclude to assessee for claiming incidental expenses incurred for carrying out business. Though, assessee has declared 6.28% net profit rate on the transport business on the gross receipt of ₹ 19,88,592/-, we in the interest of justice and being fair both the parties and looking to the fact that books of accounts are not audited, are of the considered view that estimating of net profit @ of 8% of the gross receipts of ₹ 19,88,592/- i.e. ₹ 1,59,087/- will be justified. Accordingly additions of disallowance of expenses of ₹ 18,63,552/- is sustained only to the extent of ₹ 34,047/-. - Decided partly in favour of assessee. Unexplained gift received from mother-in-law and father of the assessee - HELD THAT:- We are satisfied with the identity genuineness, creditworthiness of the donor Smt. Urmila Jain who is a mother-in-law of the assessee and thus, find no reason to doubt the genuineness and creditworthiness of the gift at ₹ 10 lacs. Accordingly, addition made u/s 68 of the Act to be deleted. Cash gift received from assessee s father as donor has expired after signing an affidavit for the gift given to his son, find no justification in the action of the Ld. AO making the addition for unexplained investment u/s 69 of the Act, since the assessee has duly explained the source of ₹ 2,50,000/- being receipt from his father. Accordingly addition u/s 69 of the Act is deleted - Decided in favour of assessee

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• 2020 (2) TMI 24
  Revision u/s 263 - interest earned by the assessee society from deposits placed in Scheduled Co.op. Bank is not eligible for deduction u/s 80P(2) - HELD THAT:- In the light of reasoning of the Tribunal in UTTAR GUJARAT UMA CO-OP CREDIT SOCIETY LTD.[ 2019 (3) TMI 381 - ITAT AHMEDABAD] in favour of assessee on eligibility of deduction under s.80P of the Act on interest earned from deposits placed with co-operative banks, the issue cannot be regarded to be free of any debate to the least. In the circumstances, the action of the AO in granting relief under s.80P of the Act cannot be dubbed as erroneous per se. Therefore, the twin conditions for invoking provisions of Section 263 of the Act are clearly not satisfied. Thus, the revisional action of the CIT cannot be regarded to be within the spheres of jurisdiction available under s.263 of the Act. Hence, the order of the CIT under s.263 of the Act is required to be set aside and cancelled. - Decided in favour of assessee.

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• 2020 (2) TMI 23
  Exemption u/s 11 - denial of exemption as funds of the society have been diverted for the personal benefit of the specified persons - assessee made payment to Rambagh Polo Club for corporate membership which has nothing to do with the objects of the society - HELD THAT:- CIT(A) had rightly upheld the decision of the AO by holding that taking a corporate membership in a private club cannot be linked to the objects of the trust /society in any manner. The trust exists for some other purposes and gets benefits under the tax laws for genuine pursuit of its objects towards good of the society and not for the business like expansion through entertainment for guests in private club and networking etc. for which normally businesses use such memberships. We also found support from the decision of Hon'ble Supreme Court in the case of CIT vs United Glass Manufacturing Co. Ltd. [ 2012 (9) TMI 914 - SUPREME COURT] wherein it was held that club membership fees is purely a business expenses and allowable u/s 37 of the I.T. Act which applies to deductions allowable against business profits. There is no such provision in trust cases for such expenses under the Governing Sections 11 to 13 of the Act . Therefore, the ld. CIT(A) had rightly upheld the decision of the AO to disallow the expenses against membership charges to Rambagh Gold Club. The provision of Section 164 specifically deals with the charge of tax where the shares of the beneficiary is unknown. Section 164(2) deals with charge of tax on the income of the trust which is derived by it from the property held wholly for charitable or religious purposes. From the plain reading of this proviso, it is evident that where the whole or any part of the relevant income is not exempt u/s 11 or 12 because of the provisions of the Section 13(1)( c) or 13(1)(d) then tax is chargeable on the relevant income or part of the relevant income at the maximum marginal rate (MMR). Thus in that eventuality, even in case there is violation of Sec 13, the entire income of the trust is not liable to be taxed at MMR but only the relevant part of the income which violates sec 13 attracts the MMR. Therefore, we find reason to interfere in the order of the ld. CIT(A). Hence, the ground Nos. 1 and 2 of the Revenue are dismissed. Disallowances of depreciation - HELD THAT:- Although it was submitted by the ld.AR of the assessee that it had not claimed cost of fixed asset as application of income as there was very meager surplus in earlier years and it only claimed depreciation of fixed asset. However, this fact has not been verified by the AO as to whether the assessee has claimed the cost of fixed assets as application of income in the previous year or not. Therefore, in our view and in the interest of equity and justice, this issue is restored back to the file of the AO with the direction to verify the facts of the earlier years as to whether the assessee had claimed the cost of fixed assets as application of income or has claimed depreciation and then pass the afresh assessment order on the issue in question by providing reasonable opportunity of being heard to the assessee. Thus Ground No. 3 of the Revenue is allowed for Statistical purposes. Addition u/s 40A(3) - HELD THAT:- We noticed that the payment was made for acquiring the fixed assets and it was also made to labour contractors who had to make payments to the labourers. All the payments were capitalized in the books of account and no expenditure was claimed as Revenue expenditure. When no expenditure was claimed in the profit and loss account then the provision of section 40A(3) cannot be applied. In this respect, we also rely on the CBDT Circular No.34 dated 5-03-1970 wherein it has clearly been stated that section 40A(3) applies only to Revenue expenditure and not to capital expenditure. Similar disallowance was mad by the AO in Assessment Year 2014-15 which was deleted by the ld. CIT(A) vide order dated 28-12- 2018 against which the Revenue has not filed any further appeal before ITAT. In this case, no new facts or circumstances have been brought before us by the Revenue in order to controvert or rebut the findings so recorded by the ld. CIT(A). Therefore, we find no reason to interfere with the order of the ld. CIT(A) on this issue. Hence, we dismiss the Ground No. 4 of the Revenue by upholding the order of the ld. CIT(A).

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• 2020 (2) TMI 22
  Disallowing the interest on late payment of TDS - HELD THAT:- As decided in own case [ 2020 (1) TMI 1094 - ITAT JAIPUR] we sustain the addition on account of late payment of TDS. Interest paid by the assessee on account of late payments of Sales Tax, Excise Service Tax and EPF - we rely upon the decision of CIT vs Western India State Motors [ 1988 (3) TMI 22 - RAJASTHAN HIGH COURT] wherein it has been said that interest payment of delayed payment of statutory liabilities is allowable as business expenditure. Therefore, the amount of interest paid in respect of late deposit of statutory/Govt. liabilities also partake the character of an expenses which is allowable as expenditure u/s 37(1). We are also fortified by the decision of Hon'ble Supreme Court in the case of Lachmandas Mathura vs CIT [ 1997 (12) TMI 16 - SUPREME COURT] wherein it was held that when any statutory dues are paid delayed and interest is paid for delayed payment then it is compensatory in nature and allowable expenditure for business u/s 37 - no doubt that delay in making payment of statutory liabilities or interest expenses on delayed payment are compensatory in nature and this is allowable expenditure in business u/s 37. Therefore, we direct the AO to allow the claim of payment of interest made by the assessee on account of late payment of Sales Tax, on account of late payment of Excise and Service Tax and on account of late payment of EPF. Addition on account of claim of loss by theft - HELD THAT:- As per facts of the present case, since the assessee was hopeful of getting the recovery of amount but it was only when the assessee during the year under consideration had come to conclusion that recovery is impossible or chance of recovery became remote, therefore, the assessee had rightly made his claim during the year under consideration. Therefore, in view of the decision of CIT vs Durga Jewellers 1987 (11) TMI 35 - MADHYA PRADESH HIGH COURT] we allow the claim of the assessee and direct the AO to delete the addition made on account of claim of loss of theft.

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• 2020 (2) TMI 21
  Entitlement to TDS credit - short/deficit credit of TDS - Whether credit for TDS should be given for the assessment year for which the income is assessable? - HELD THAT:- Unable to subscribe to the view taken by the lower authorities that despite the fact that the sales/receipts were accounted for by the assessee during the year under consideration viz. A.Y 2015-16, the corresponding credit of TDS of ₹ 45,41,995/- was not be allowed to it in the said year. We are unable to persuade ourselves to subscribe to the view taken by the lower authorities, that the credit for the tax deducted at source (TDS) was to be allowed to the assessee in the immediately succeeding year i.e A.Y 2016-17, despite the absence of the assessable income in the said year. Accordingly, we restore the matter to the file of the A.O, with a direction to allow the short/deficit credit of TDS of ₹ 45,41,995/- to the assessee in the year under consideration i.e A.Y 2015-16. A.O before allowing the credit of the TDS of ₹ 45,41,995/- shall verify the veracity of the claim of the assessee that the sales/receipts corresponding to the TDS credit of ₹ 45,41,995/- were accounted for by it during the year under consideration viz. A.Y. 2015-16. Also, as a word of caution, the A.O shall take necessary steps in order to ensure that no TDS credit of the aforesaid amount of ₹ 45,41,995/- is/was availed by the assessee in the immediately succeeding year i.e A.Y 2016-17 in which the same is reflected in its Form 26AS .

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• 2020 (2) TMI 20
  Assessment of capital gains in the hands of assessee HUF - claim of the assessee is that the capital gains has arisen in the individual capacity of the assessee - HELD THAT:- As earlier that the assessee has sold agricultural land located within the Municipal limits to a person named Sri Rajesh Runawal, for a consideration of ₹ 13.05 lakhs. However, since Shri Rajesh Runawal agreed before the ADIT(Inv.)Belgaum that the sale consideration was 34.60 lakhs, the assessee also declared the sale consideration at ₹ 34.60 lakhs, as noticed earlier. We noticed earlier that the assessee had originally declared capital loss of ₹ 27.30 lakhs, due to some computational error. However, in the revised return of income, the assessee-HUF herein has declared capital gains as nil, after claiming deduction u/s 54B of the IT Act. It can be noticed that the assessee-HUF, in two occasions, i.e., in the original return and in revised return of income, has conscious declared the capital in its hands. Accordingly, there is merit in the submission of Ld D.R that the assessee has taken a conscious decision to file return of income in the status of HUF only. Assessee has not brought any new material on record to show that the land actually belonged to individual status. As rightly pointed out by the ld.CIT(A), the onus to prove the above said claim would lie on the assessee and the assessee has failed to discharge its onus by bringing cogent material in support his claim. But to confirm the order passed by the ld.CIT(A) on this issue. Appeal filed by the assessee is dismissed

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• 2020 (2) TMI 19
  Additions u/s 206C(A)/206C(7) - non collection of TCS on sale of DOC, Maize husk and cotton waste - HELD THAT:- As decided in own case [2016 (3) TMI 859 - ITAT AHMEDABAD] CIT(A) was justified in holding that the Assessing Officer has erred in categorizing DOC as scrap within the meaning of Explanation to Section 206C. Regarding the raw cotton being treated as scrap we find raw cotton is only a part of raw material which is of lower quality (lower count cotton) from which the thin yarn cannot be manufactured such thick quality cotton was separated at the initial warehousing stage and sold off to other yarn manufacturers including that for export. So, the CIT(A) was justified in holding that such raw cotton does not arise from manufacturing or mechanical working as it is merely a segregation of raw material as was pointed out by the assessee. Therefore, these reasoned finding of the CIT(A) need no interference from our side, which is confirmed. Regarding Maize Husk (Fiber)percentages of husk as a by-product is close to 10% and it is mainly used in poultry farm, animal food and pharma industries. Since maize husk fiber is itself subjected to various manufacturing stages and as enormous economic value, it is one product manufactured and cannot be considered as a waste or scrap within the manufacturing process. CIT(A) was justified in holding that main husk is a by-product and the same cannot be considered as scrap and waste as provided in the Explanation to Section 206C of the Income-tax Act. Short deduction of tax at source - TDS u/s 194C or 194J on payments made to C F Agents - HELD THAT:- CIT(A) rightly found that C F agents were nowhere remotely indicated in the explanation to section 194J of Income tax Act nor has been explained by the AO that how C F was covered u/s. 194J of the Income-tax Act. Therefore, under the given facts and circumstances of the case, the CIT(A) was justified in holding that the action of Assessing Officer invoking provision u/s 194J in respect to port charges payment for all the assessment years as unsustainable in law. Therefore, the order of the CIT(A) in this regard does not require any interference from our side, which is confirmed.

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• 2020 (2) TMI 18
  Unexplained cash credit u/s 68 - onus to prove - HELD THAT:- Assessee has to prove three main ingredients viz., the identity of the creditor, credit worthiness of the creditor and the genuineness of the transactions. In the instant case, it is the claim of the assessee that she has received ₹ 12.00 lakhs and ₹ 4.00 lakhs respectively from her brother and mother. The copies of Statement of total income/income tax returns were furnished to show that both the above said persons are having credit worthiness for make the above said payments. As noticed earlier, both are assessed to income tax and are declaring total income exceeding ₹ 25.00 lakhs. Since both the persons are blood relations, the transactions have been entered through cash. Besides the above, Shri Abhilash is a director of a company and the said company has also confirmed the transactions entered between it and Shri Abhilash. Though the assessee furnished copies of income tax returns of Smt. Subhashini (mother) before the AO, a specific confirmation letter was not filed. Documents show that the identity of the creditors was not doubted and the credit worthiness of both the creditors, in my view, has been proved. Since the transactions were between blood relatives, in the facts of this case, the genuineness cannot be doubted. Hence addition of ₹ 12.00 lakhs and ₹ 4.00 lakhs referred above was not justified Remaining deposit of ₹ 14.00 lakhs - assessee has submitted that she has used her past withdrawals for making the above deposits ad is also having good income and her past savings were also used to make the above said deposits - HELD THAT:- AO has rejected the above said explanations of the assessee without examining the cash flow statement of the assessee. There is no bar for depositing cash withdrawals again into the bank account. When the assessee has not spent the cash withdrawals, it is quite natural to deposit the said amount into the bank account. In order to reject the above said claim of the assessee, it is necessary to show that the assessee has spent the amount so withdrawn. Accordingly I am of the view that the addition of ₹ 14.00 lakhs require fresh examination at the end of the AO. Accordingly I set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO for examining the claim of the assessee with the statement of cash withdrawal - Appeal of the assessee is treated as partly allowed

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• 2020 (2) TMI 17
  Addition u/s 14A - HELD THAT:- Maxopp Investment Ltd. Vs. CIT, New Delhi [2018 (3) TMI 805 - SUPREME COURT] had rightly concluded that the shares which were held by the assessee as stock-in-trade were to be considered for the purpose of computing the disallowance under Sec. 14A Adhoc disallowance had been preferred as against that worked out under Sec. 14A r.w. Rule 8D(2), having been rendered without considering the aforesaid judgment of the Hon ble Apex Court in the case of Maxopp Investment Ltd. [2018 (3) TMI 805 - SUPREME COURT] would also not be binding. We thus finding no infirmity in the order of the CIT(A) who had rightly sustained the disallowance computed by the A.O under Sec. 14A r.w. Rule 8D(2)(iii), therein uphold the same. Appeal filed by the assessee is dismissed.

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• 2020 (2) TMI 16
  Revision u/s 263 - as per CIT A.O had failed to make any enquiry as regards the entitlement of the assessee towards claim of depreciation on goodwill as per the Proviso 5 of Sec. 32(1) - HELD THAT:- As the A.O in the course of the assessment proceedings had examined the assesees entitlement towards claim of depreciation on goodwill , and had only after necessary deliberations finding the same to be in order had accepted the same, therefore, the Pr.CIT in exercise of the powers vested with him under Sec. 263 of the Act, was divested of his jurisdiction for seeking dislodging of the aforesaid possible, or infact a balanced and a reasonable view taken by the A.O. Our aforesaid observation that a possible view arrived at by the A.O after necessary deliberations cannot be dislodged by the CIT/Pr.CIT in exercise of revisional jurisdiction under Sec. 263 is fortified by the judgments of the Hon ble Supreme Court in the case of Malabar Industrial Company [ 2000 (2) TMI 10 - SUPREME COURT] nd CIT Vs. Max India Ltd [ 2007 (11) TMI 12 - SUPREME COURT] . Also, support his drawn from the judgments of the Hon ble High Court of Bombay in the case of Grasim Industries Ltd. Vs. CIT [ 2010 (2) TMI 4 - BOMBAY HIGH COURT] and CIT Vs. Gabriel India Ltd [ 1993 (4) TMI 55 - BOMBAY HIGH COURT] . Accordingly, not being able to persuade ourselves to subscribe to the view taken by the Pr.CIT that the order passed by the A.O under Sec. 143(3), dated 23.12.2016 was erroneous insofar it was prejudicial to the interest of the revenue, we set aside his order and restore the order passed by the A.O. - Decided in favour of assessee.

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• 2020 (2) TMI 15
  Eligibility of exemption u/s 11 - whether the assessee trust is entitled to exemption under s.11 of the Act on surplus arising from carrying on of activities in the nature of safety training programme etc. ? - HELD THAT:- In the instant case as the income of the trust are being stated to be ploughed back for the furtherance of objects of the trust, such activities would not portray the character of commercial nature. Therefore, applying the principles, the activities of the trust cannot be deemed to be a commercial venture. Thus, in our considered view, the activities of the assessee cannot be excluded from the ambit of definition of Section 2(15) of the Act where the registration of the assessee is in force. The assessee, in our view, would be entitled to deduction under s.11 of the Act on surplus as claimed. Viewed from a different angle, multifaceted activities in the form of handbook/literature published together with stated activities like holding conferences on industrial safety programmes, public talks, seminars, workshops etc. on ongoing basis to inculcate safety measures would also be bracketed in the league of educational activities when tested in the light of the decision in the case of Ahmedabad Management Association [ 2014 (8) TMI 638 - GUJARAT HIGH COURT] took note of the changing times and ever widening of horizon of knowledge, rapid changes in the method of teaching for constituting the word education used u/s .2(15) of the Act. Thus, on a fair reading of the activities carried out, the assessee, in our view, would be entitled for exemption under s.11 of the Act without any demur. - Decided in favour of assessee.

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• Customs

• 2020 (2) TMI 14
  Claim of duty drawback on supplies from DTA to EOU - Deemed export drawback - HELD THAT:- Leave granted.

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• 2020 (2) TMI 13
  Return of bond and bank guarantee given for the purpose of provisional release at the time of clearance of goods - HELD THAT:- It appears that the bank guarantee in question is not a live bank guarantee. Moreover, as submitted by learned counsel for the respondent that vide a communication dated 23rd January, 2020, the Provisional Duty Bond for ₹ 34,92,685/- has been cancelled. It is further submitted by learned counsel for the respondent that by the aforesaid communication, the petitioner has been allowed to collect the bank guarantee dated 26th July, 2017. In view of aforesaid statements made by learned counsel for the respondent with respect to the Provisional Duty Bond and the Bank Guarantee, the grievances ventilated in this writ petition have been brought to an end by the respondent. Petition disposed off.

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• 2020 (2) TMI 12
  Release of seized consignments for purposes of re-export - grant of waiver of demurrages levied upon the Petitioner - monetary compensation in the form of exemplary damages - HELD THAT:- The Order-In-Original has already been passed by the concerned authority. Re-export of the goods in question have already been permitted. Moreover, as submitted by the counsel for respondent that vide communication dated 15th October, 2019 which is Annexure-A to the counter filed by respondent No.4, this petitioner has already been communicated that NOC is granted for re-export of the goods in question. Thus, the main grievance ventilated in this writ petition about the re-export of the goods in question has already been granted by the respondent No.4. Waiver of demurrages - HELD THAT:- This Court in M/S. GLOBAL IMPEX THROUGH ITS PARTNER, SHREE SHYAM ENTERPRISES, SURENDER KUMAR JAIN THROUGH ITS PROPRIETOR, BISHT INTERNATIONAL THROUGH ITS PROPRIETOR, ROOP SINGH ENTERPRISES THROUGH ITS PROPRIETOR, VERSUS MANAGER, CELEBI IMPORT SHED AND ANR., UNION OF INDIA ORS. [ 2019 (12) TMI 957 - DELHI HIGH COURT] held that the demurrages are bound to be paid by the petitioner in accordance with law. Accordingly, this petitioner is bound to make the payment of demurrages. There are no reason to entertain this writ petition for waiver of the demurrages - petition disposed off.

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• 2020 (2) TMI 11
  Provisional release of goods - Section 129 B of the Customs Act - HELD THAT:- There is no bar for the appellant to make request for reconsideration of the conditions imposed for provisional release of the seized goods before the adjudicating authority. In the present case appellant have done so. Once such a request has been made the adjudicating authority should consider such request and dispose of the same - CBEC vide Circular dated 35/2017-Cus., dated 16.08.2017 issued Guidelines for provisional release of seized imported goods pending adjudication under Section 110A of the Customs Act, 1962 reg . These also should be taken into account by the adjudicating authority while disposing of the representation made by the appellants before him. The ends of justice will be met if the adjudicating authority is directed to consider the representation dated 6.12.2019 made by the appellant before him - Appeal allowed by way of remand.

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• 2020 (2) TMI 10
  Interest on account of delayed sanctioned of refund - HELD THAT:- The deposit that has been made by the Appellant is required to be returned with interest in terms of provisions of Customs Act read with CBEC Circular No. 984/08/2014-CX dated 16/09/2014 - In view of instruction from CBEC, which is binding on the adjudicating authority and also the legal provisions of Section 27 of the Customs Act which mandates the Department to grant interest on refund to the Appellant which has not been done in this case. This is a case of pure harassment to the Appellant by the Departmental Officer in order to get the legitimate due from the Department. The amount of deposit during investigation has been taken illegally and retained by the Department due to callous attitude of the departmental officer including that of Commissioner (Appeals), who has acted contrary to provisions of Customs Act and also against the directions given by the Central Board of Customs and Excise. Interest is required to be granted to the Appellant for the delayed refund for deposit during investigation as per law - Appeal allowed.

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• 2020 (2) TMI 9
  Maintainability of appeal - appeal rejected only on the ground that there is no order of assessment by the proper officer of customs as they were RMS facilitated bills of entry and goods were cleared on the self assessment done by the Appellant - Section 128 of the Customs Act - HELD THAT:- Hon ble Supreme Court in the matter of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] has laid down that as the order of self-assessment is nonetheless an assessment order passed under the Act, obviously it would be appealable by any person aggrieved thereby. The Hon ble Supreme Court also observed that the order of self-assessment is an order of assessment as per section 2(2), as such, it is appealable in case any person is aggrieved by it. Section 128 has not provided for an appeal against a speaking order but against any order , which is of wide amplitude. The law laid down by the Hon ble Supreme Court squarely applies on the facts of the case. The language of Section 128 ibid is clear and unambiguous and the reasoning given by the learned Commissioner that since there is no order or decision of any Customs officer, the appeal filed by the appellant cannot be sustained, is erroneous and contrary to law. Matter remanded back to the learned Commissioner with a direction to decide the Appeal on merits after affording reasonable opportunity of hearing to the Appellant - appeal allowed by way of remand.

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• 2020 (2) TMI 8
  Re-export of imported goods - low Aromatic White Spirit - grant of authorization from DGFT for import of the impugned goods - HELD THAT:- The Original Adjudicating Authority has ordered to redeem the goods and re-export the same. Further, the goods were confiscated for violation of the provisions of the Customs Act read with Foreign Trade Policy. The Foreign Trade Policy has not provided for restriction by any other importers than State Trading Enterprises to import the same. As per the policy, after getting an authorization from DGFT persons other than State Trade Enterprises can import the impugned goods. There has been a violation of such none production of authorization from DGFT. The order to re-export the same is not sustainable - that part of the impugned order through which the impugned goods were ordered to be re exported after redemption is set aside - clearance of the impugned goods for home consumption on the payment of redemption fine ordered through the impugned orders along with customs duties required to be paid is allowed - all personal penalties set aside. Appeal allowed in part.

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• 2020 (2) TMI 7
  Relinquishment of title to the goods lying uncleared - non-disposal of the claim of appellant, in relation to the goods already cleared, for relinquishment, and refund, under section 26A of Customs Act, 1962 - HELD THAT:- It was not open to the first appellate authority to revisit a decision taken in favour of appellant save on appeal authorised by Commissioner of Customs. That apparently has not occurred yet. Moreover, proviso to section 128(3) of Customs Act, 1962 empowers the issue of show cause notice only for enhancing penalty or any other detriment or for rejection of refund sanctioned by the original authority. Proceedings that lie before the original authority can be initiated only under section 28 of Customs Act, 1962 or under section 124 of Customs Act, 1962 neither of these envisages Commissioner of Customs (Appeals) as the proper officer . Consequently, the notice contemplated by proviso to section 128(3) of Customs Act, 1962 is limited to enhancement or reduction, as the case may be, within the confines of the notice that commenced proceedings leading to the appeal. The extent of enhancement or reduction was limited to such as were proposed in the original notice; there is no empowerment in section 128 of Customs Act, 1962 for a new proceedings or cause of action. Such would also not constitute an enhancement and, therefore, the issue of show cause notice leading to the specific direction in the impugned order is beyond the pale of law. Relinquishment of title to the goods is not permissible to goods that have already been cleared. Consequently, the claim for refund of section 26A is limited only to such as those which were uncleared and acknowledged as relinquished - There is no flaw in non-consideration of the claim in relation to the goods cleared by appellant - Appeal disposed off.

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• 2020 (2) TMI 1
  Application for early hearing of appeal - HELD THAT:- On going through the submissions made in the said application, we are of the view that this is a fit case for consideration of the prayer in support of early hearing of appeal. Accordingly, the miscellaneous application is considered. Registry is directed to list the appeal for final hearing on 10.01.2020.

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• Central Excise

• 2020 (2) TMI 6
  Valdity of SCN - pre-mature stage - recovery claim - HELD THAT:- Vide impugned SCN, this petitioner has been called upon to show cause as to why the aforesaid amount should not be recovered from them. Thus, it appears that the final adjudication of the show cause notice by the respondent is yet to take place and hence we see no reason to entertain this writ petition at a pre-mature stage. It is also submitted by learned counsel for both the sides that the aforesaid show cause is yet to be replied by the petitioner despite the fact that it was issued in the month of September, 2019. Petition dismissed.

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• 2020 (2) TMI 5
  Clandestine removal - on the basis of third party records - corroborative evidences or not - HELD THAT:- The contention of Revenue is that there is no third party involved in this matter. The said argument is not acceptable as Revenue itself is the litigant in this case who alleged that appellant is engaged in the activity of clandestine removal of goods. The said allegation is based on the record recovered from M/s PIL who is third party in this case. Strangely no show cause notice has been issued to PIL to impose penalty under Rule 26 of Central Excise Rules, 2002. Revenue s case is based on the records recovered from M/s PIL and the statement of Shri Pankaj Agarwal. In terms of Section 9D of Central Excise Act, 1944 the Revenue was required to produce Shri Pankaj Agarwal in their defence to testify the documents recovered and the statement made by Shri Pankaj Agarwal are true and correct and thereafter the appellant was required to be offered for cross-examination of Shri Pankaj Agarwal. As the said act has not been done by the Adjudicating Authority, therefore, in terms of Section 9D of the Act, the evidence relied upon by the Revenue have no value in the eyes of law. As Revenue has failed to produce any supporting evidence in their favour, therefore, the charge of clandestine removal is not sustainable - appeal allowed - decided in favor of appellant.

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• 2020 (2) TMI 4
  Clandestine removal - shortage of finished goods and raw materials, as compared with the stock records - demand on the basis of records recovered and statements recorded under Section 14 of the Central Excise Act - CENVAT Credit - credit denied on the strength of invoices were no goods allegedly were received in the factory of the appellant. HELD THAT:- On perusal of the impugned order passed by the learned Commissioner, it is found that the he has neither followed the provisions of Section 9D of the Central Excise Act, 1944, nor the law laid down by the Hon ble Punjab and Haryana High Court in M/S G-TECH INDUSTRIES VERSUS UNION OF INDIA AND ANOTHER [ 2016 (6) TMI 957 - PUNJAB HARYANA HIGH COURT ] - thus, the statements recorded under Section 14 of the Central Excise Act, cannot be relied upon and hence has to be eschewed from the evidence. Further, the ld. Commissioner have not dealt with the stand of appellant, do not have manufacturing capacity to manufacture the goods as alleged by the department. With respect to documents relied upon by department, the author of the said documents has not been identified and examined - In view of the law laid down by the Hon ble High Court of Chhattisgarh in the case of Hi-Tech Abrasives Ltd. Vs CCE Customs, Raipur, [ 2018 (11) TMI 1514 - CHHATTISGARH HIGH COURT ], the said documents cannot be relied upon. The department has also not enquired at the end of the buyers and there is no positive evidence adduced by the department. The demand has been confirmed on the basis of assumption and presumption - Therefore, demand of ₹ 44,06,966/- on alleged 2118.733 MT of SS Ingots clandestinely cleared for the period 18.08.2002 to 16.12.2002 is hereby set aside. Further, the stock taking has been conducted on eyes estimation basis, as can be seen from the Panchnama drawn at the factory premises. However, the director Mr. Raman Bhatia and the Authorized Signatory Mr. Rajesh Sharma had expressed satisfaction and agreed with the shortage computed - demand on the alleged shortages is confirmed, but penalties set aside. CENVAT Credit - denied only the basis of statement of transporter and Sh. Rajesh Sharma (Authorized Signatory) - HELD THAT:- The said statements has to be eschewed from evidence inasmuch provisions of Section 9D has not been followed. Therefore, the denial of cenvat credit of ₹ 64,244 is not legally sustainable and hereby set aside. Since the demand is set aside, therefore interest and penalty is also set aside, and further penalty on Sh. Raman Bhatia is also set aside - appeal allowed - decided in favor of appellant.

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• 2020 (2) TMI 3
  Supply of cables for research purposes - benefit of N/N. 10/1997- Central Excise dated 1.03.1997 (Sl.No.2) - benefit of notification denied alleging that the wires and cables in running length could not be considered as parts or equipment or accessories of any machines and/or water treatment plant - HELD THAT:- In the present case, necessary certificates as required by the N/N.10/97-CE dated 10.03.1997 and N/N. 6/20060CE dated 1.03.2006 have been issued by the Competent Authorities - Tribunal has consistently held that when a certificate was issued by the competent authority regarding specific end-use of goods as required under notification, the exemption cannot be denied. Tribunal in the case of M/S. K.E.I. INDUSTRIES LTD. VERSUS CCE, JAIPUR [ 2016 (3) TMI 228 - CESTAT NEW DELHI] and M/S. HAVELLS INDIA LIMITED VERSUS CCE, DELHI [ 2017 (4) TMI 986 - CESTAT NEW DELHI] has held that cables supplied to Water Supply/Treatment plant are eligible for exemption under relevant notifications. Appeal allowed - decided in favor of appellant.

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• 2020 (2) TMI 2
  Closure of proceedings on the ground that appellant has waived their right to a written show cause notice - appellant deposited the demand with interest and penalty under protest to buy peace - CENVAT Credit - paper invoices/fake documents - no inputs received - the bone of contention between the appellant and the DGCEI is that the settlement is not in the proper legal spirit, neither it is out of free consent and have further exposed the appellant to adverse inference particulary under the other tax laws and also as a matter of business repute - HELD THAT:- In the facts of the present case, in view of the non acceptance of the allegation of the DGCEI by the appellant, as to non receipt of the inputs in question, we hold that the purported waiver vide communication dated 20.07.2016 is bad and illegal and is not enforceable against the appellant. Due to non agreement with the allegation of the DGCEI by the appellant, the DGCEI was bound to issue show cause notice and thereafter proceed in accordance with law. It has been provided in the CBEC circular / clarification dated 18.08.2015 that the letter of closure should be issued by an officer equivalent to the adjudicating authority. Further, quantification of the demand can only be communicated to an assessee once an investigation gets completed. Further, as per CBEC clarifications, a letter of closure is required to be issued without a separate adjudication order. Thus, the said closure dated 29.07.2016 is equivalent to an adjudication order, for all practical purposes. Thus, even instructions dated 18.08.2015 of CBEC have also been circumvented by ADG, DGCEI by issuing the closure letter, instead of a show cause notice, there being non acceptance of the allegation of the Revenue by the appellant / assessee. The impugned letter of closure dated 29.07.2016 is bad and illegal and the same is accordingly set aside. The said closure letter is neither in the spirit of the CBEC‟s circular/ clarification dated 18.08.2015 and is evidently in violation of the provisions of Section 11 A(4) read with Section 11 AC (1)(d). Appeal allowed - decided in favor of appellant.

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